TILOKECHAND SURANA Vs. JBBEATTIE AND CO

JUDGEMENT

(1.) This case raises an important question as to the rights of a mortgagee of premises which at the time when the mortgage was executed were in the occupation of a tenant of the mortgagor. The material facts are as follows: In 1907 two persons by name Hyam and Jones, who at that time were the owners of the premises in suit, No. 3-1 Mangoe Lane, let a portion thereof to the defendants as monthly tenants at the rent of Rs. 150 a month. On the 13 July 1914 Hyam and Jones mortgaged certain premises, including the premiss in suit to M.A. Sassoon and others. On the 13 January 1917 the mortgagees filed a mortgage suit against Hyam and Jones for an order for the sale of the mortgaged premises. On the 16 March 1917 M.A. Sassoon, one of the mortgagees, was appointed receiver of the said premises by order of the Court. On the 17 July 1917 a preliminary decree for sale was passed.

(2.) Now, Hyam was accustomed to make out the defendant's rent bills, and to obtain the rent up till the time when the appointment of the Receiver was made, and thereafter until the date of the agreement to which I am about to refer, the course adopted for the purpose of collecting the rent was that Hyam made out the rent bills and endorsed them to Sassoon and the money was collected by Sassoon's peon. In 1920 the premises in suit were in need of <JGN>Page</JGN> 2 of 8 repair, and on the 7 June 1920 an agreement was entered into between Hyam and Jones on the one hand and the defendants on the other whereby the defendants advanced to Hyam and Jones Rs. 7,800 on that date, Rs. 1,500 on the 20 October 1920, and Rs. 2,500 on the 29fch December 1920 in order to provide funds for the repair and improvement of the premises while Hyam and Jones on their part undertook to expend the money advanced on repairs, and to treat the sums so paid as rent paid in advance. It was further agreed that after the work of repair and improvement had been carried out the rent payable should be increased to Rs. 200. After the 7 June 1920 no further rent bills were made out or rent collected. I find that this agreement was made, and that the above statement of facts correctly represents the arrangement which was made, and what took place in respect there of.

(3.) Further, although the defendants were not aware that the mortgage to Sassoon and others had been executed, I am satisfied on the evidence that the mortgagees were fully apprised of the nature of the agreement of the 7 of June 1920, and from the evidence adduced before me I draw the inference that the mortgagees gave their sanction to it. I am invited by the plaintiffs to come to a conclusion from the evidence that the mortgagees neither knew nor approved of this agreement, but, in my opinion, the natural and reasonable inference to be drawn is to the contrary effect. Sassoon was not only a mortgagee, but the receiver of the rents and profits derived from the mortgaged promises. I am at a loss to understand when Sassoon after the 7 June 1920 found that the rent was no longer being paid monthly as heretofore or at all why he did not protest and demand payment of the rent unless he was aware and approved of the agreement between Hyam and Jones and the defendants. In my opinion, the true view is that the Sassoon mortgagees fully understood, and were privy to, this agreement. In July 1921 Hyam and Jones were minded to pay off the Sassoon mortgage and on the 12 July 1921 they granted a mortgage of the said premises to the plaintiffs for six lakhs, and interest thereon at 12 per cent. On the same day with, the proceeds which resulted from the execution of the plaintiffs mortgage Hyam and Jones (as appears from the petition of the Sassoon mortgagees dated 22 February, 1922) paid to the Solicitors for the said mortgagees a sum of Rupees 6,92,093 which admittedly was accepted by Messrs. Morgan & Co,, their attorneys, in full satisfaction of the Sassoon mortgagee's claim for principal and interest due under the decree passed in the mortgage suit. Thereupon Morgan & Co., gave to Hyam and Jones a receipt in the following terms: Suit No. 270-16M.A. Sassoon V/s. J.I.J. Hyam. Received from Messrs. Hyam and Jones a cheque for Rs. 7,02,000 only, viz., Rs. 6,92,093-3 in full satisfaction of the plaintiff's claim for principal and interest; due under the decree herein and Rs. 9,906-13-2-0 on account of the costs of the suit. We undertake to refund excess, if any, on adjustment of the costs of his suit. (Stamped with a one-anna stamp and dated 12 July 1921). <JGN>Page</JGN> 3 of 8